Finance Committee OKs $155M tax refund

Updated 7:42 pm, Tuesday, April 1, 2014

HARTFORD -- The Legislature's Finance Committee, in a mostly party-line vote, approved the governor's proposed election-year tax refund of $155 million on Tuesday.

Leaders of the Democrat-dominated panel said taxpayers who felt the brunt of the state's multibillion-dollar deficit of 2010 should now get a little something back. After a record $1.3 billion tax hike, the state has a projected surplus of more than half a billion dollars in the fiscal year ending June 30.

The refunds, if approved for the budget that starts July 1, would give $55 back to single tax filers and $110 to couples.

Republican attempts to strip the refund proposal failed in votes of 31-18 and 31-17. The bill passed 31-19, with one Democrat voting against it.

The bill heads now to the Senate, following closed-door negotiations among House and Senate leaders, and Gov. Dannel P. Malloy, as companion legislation to last week's $19 billion spending package approved by the Appropriations Committee.

Rep. Patricia Widlitz, D-Guilford, co-chairman of the Finance Committee, said the fact that the proposal is a refund, not a rebate, would mean that state residents would not have to claim it on their income taxes.

"This is a tribute to the people who withstood the hard times with us," she said.

"Now for the first time in several years, we see a little bit of light at the end of the tunnel," said Sen. John W. Fonfara, D-Hartford, co-chairman of the committee. "Now, this governor has said that those who sacrificed should share in the benefit to our economic system. This is a one-time $55 refund. It will probably be in and out back into the economy fairly quickly."

Sen. L. Scott Frantz, R-Greenwich, ranking member of the Finance Committee, said the feedback from within his district is one of "disbelief," amid concerns that projected multibillion-dollar deficits in two years could boomerang on the General Assembly.

"They themselves are saying, `Hey, I filled up my car yesterday and it cost $52 to fill half the tank and it's a hybrid,' " Frantz said. "What good is that really going to do for the economy? Job creation? The advice we're getting is: Do the right thing for the state."

"The monies that would have gone in $55 checks can go toward state debt," McLachlan said. "This could help mitigate the nightmare ahead."

"This isn't real tax reform," said Sen. Toni Boucher, R-Wilton, who called for more support for small business. "We have a very unhappy, overburdened business sector in this state. I would maintain that instead of the $55 to each individual -- which honestly, people are laughing about this; they see this as an election-year giveaway ... help small business."

Rep. John Shaban, R-Redding, said the refund debate, coming on the heels of the recent votes to increase Connecticut's minimum wage, ignores the structural problems that could create a billion-dollar deficit in a year.

"We could say, `Thank you for the sacrifice,' but we shouldn't say, `Here's 55 bucks, but don't look past next year,' " said Shaban, a candidate for the Republican nomination to challenge U.S. Rep. Jim Himes in the 4th Congressional District.

Rep. Vincent J. Candelora, R-North Branford, said the bill is a short-term tax package at the expense of the state's over-arching needs.

"We really should be using every surplus revenue to institute policies that would pay down long-term obligations and policies," Candelora said. "In my district, people are asking, `What can I do with $55?' Just keep the money and pay down debt."

Senate Minority Leader John McKinney, R-Fairfield, a GOP candidate for governor, said in a statement that the committee action was expected. He called the refunds Malloy's "most infamous and disingenuous gimmick" and one that is unacceptable with a billion-dollar deficit when the Legislature tackles its next two-year budget next year.

Malloy praised the Finance Committee.

"When I proposed my budget, I laid out my plan for using that surplus in a responsible way," he said in a statement after the vote. "I said we should first put the lion's share into our Rainy Day Fund, we should pay down our long-term debt and we should give something back to Connecticut taxpayers in the form of a sales and gas-tax refund. After all, if Connecticut taxpayers are asked to share in the sacrifice during tough times, they should also share in the state's continuing economic recovery."

The bill includes the governor's plan to exempt 25 percent of retired teacher pensions next year; and exempt 50 percent the year after, because public educator salaries do not include Social Security contributions or benefits upon their retirement.

The bill would also restore a sales-tax exemption on non-prescription drugs and exempt towns and cities from taxes on health plans.